I’d invest my first £1,000 in this FTSE 100 dividend stock

Rupert Hargreaves explains why he’d pick this top FTSE 100 dividend stock to be his first investment.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Many FTSE 100 property companies are currently trading on low valuations. They also offer high dividend yields, which suggests buying a portfolio of them could generate attractive investment returns over the long term.

One blue-chip property stock that stands out is real estate investment trust (REIT) Landsec (LSE: LAND).

Challenges in the retail sector

The company has fallen out of favour with investors recently due to continued challenges in the retail sector. However, Landsec has been able to avoid the worst of the sector’s turbulence due to continued high demand for office space in London.

Landsec has continued to refine and develop its offering despite sector headwinds. Management has reorganised properties to produce the best returns and sold off those with the worst outlooks. The company has also been developing its own flexible office brands.

Myo offers flexible office space while Landsec Fitted offers slightly longer-term leases with fully fitted-out space. The company has also launched Landsec Lounge, a communal, break-out space offering for tenants that has been piloted at London’s Cardinal Place, SW1.

These offerings are proving popular, according to the company’s latest trading update, which suggests management is making the right moves.

Landsec is now planning to invest large sums of capital in its London property portfolio. In its latest trading update, the company also informed investors it’s planning to push ahead with 1m sq ft of new buildings across the capital.

This £3bn development portfolio seems to be a good investment for the long run. Landsec believes London will face an office shortage in the years ahead, and the company wants to make sure it has plenty of capacity to meet customer demands for the next decade.

Forward-thinking

These forward-thinking development plans should help the business stay ahead of the crowd, and produce a steady growing income for investors over the long run, as well as capital appreciation.

However, despite the firm’s growth plans, Landsec currently trades at a significant discount to its net asset value. The stock trades on a price-to-book (P/B) ratio of 0.8, which suggests the shares offer a wide margin of safety and could be good value compared to other FTSE 100 stocks. Alongside this low valuation, the company also offers its investors a dividend yield of 4.8%.

With the demand for office space likely to continue to outpace supply for the foreseeable future, now could be the time to buy London-focused property companies like Landsec.

The company’s strengths could help it navigate a tricky market and emerge the other side in a stronger position than many of its peers. As such, now could be the time for long-term focused investors to snap up shares in this deeply discounted REIT as Brexit uncertainty to continues to weigh on its share price.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves owns shares in Landsec. The Motley Fool UK has recommended Landsec. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »